The Tech Take

This past week certainly had its share of vendor news, from executive hires to new or updated offerings, but none was more noteworthy than the Sage North America sell-off of three members of its product line.

It's not often I focus on one particular vendor, but given the gravity of Sage's latest move I think it demands some analysis.

First off, for those of you that didn't catch the news for some reason late last week Sage made a move to sell off its Nonprofit division as well as its ACT! and SalesLogix products to the tune of about $250M. For the most part, the move didn't seem to surprise too many partners (or press and analysts for that matter), as many of them heard very clearly back at Sage Summit how the companny would be focusing more on its "core products." Though at the time when pressed, executives balked at the idea of selling off so-called "non-core" products, which many regard as Nonprofit, CRM(with the exception of Sage CRM) and Construction/Real Estate.

While two of the three core "non-core" product groups are now gone, one is left to wonder just when or if Construction/Real Estate (formerly the Timberline and Master Builder line) will be next. I'd have to say with confidence this would be the case and probably even before the next Summit meeting in July. Then what of other so-called "non-core" product lines like Fixed Assets (FAS)? Again, that remains to be seen though just today Sage announced enhancements to that product offering as well with the release of Sage Fixed Assets 2013.1. Even in conversations with Sage North America CEO Pascal Houillon, he seemed to indicate more attention and resources would be placed on its current accounting and ERP line from Sage One to 500 and X3, as well as its now flagship CRM product. Development would also move in the direction of making at least aspects of these products more cloud and mobile-friendly. And let's face it, since the Sage family of products began forming in the early 2000s, everyone was wondering how exactly Sage North America would make sense of selling them all under one brand and even to this day it has admittedly struggled with this prospect.

So maybe it wasn't so much the re-branding of all of its products that is the most significant move for Sage, but the fact that it realizes in order to compete in what has become a very crowded field when it comes to accounting, ERP and CRM, it must innovate and focus -- yes, remember 'focus' those of you who attended Summit 2012, it was the most notable term Houillon stated for a number of reasons. That focus will of course be on continued rebranding efforts, but also on making sure the aforementioned product lines can indeed compete and maybe even lead one day so overall, even though it may be a loss on the books, the sell-off was a good move if that focus is to happen.

As I mentioned, this week was not all about Sage and I would like to give a quick recap of some of the other goings on over the past several days:

The executive-level hiring at Acumatica clearly does not seem to stop as the cloud and hosted ERP product maker continue to add to its ranks, once again reaching into the Microsoft Dynamics camp. The company recently signed on former Dynamics channel exec Christian Lindberg to head up its ISV channel. Like its other recent moves, this one is all about growth as Acumatica clearly wants to show the world -- and North America in particular -- that it is a real player in the cloud ERP space and what better way to do that than hire the right people to drive channel and product offerings. Andy of you are a VAR of any significance (particularly in the Microsoft channel) and haven't been contacted by them yet, you will.

Xero is also back adding to its offerings, this week it announced that its users can now do bank reconcilliation on their mobile devices. A very handy tool to have and it's something they built. Xero is essentially on the path of trying to make accounting as simple as it can be and its offerings will either be built or integrated from a partner as with its partnership with Harvest for time tracking and invoicing. Accountants too are taking notice of the product as it is free for them and money in their pockets when their clients are on it. In fact, I know some Top 100 firms that are taking a good hard look at the product for BPO and other client work.

Also on the mobile front, Intuit brought its iPad app offering to QuickBooks Online so now users can get most of what they need from QBO on their iOS devices. It makes sense for anyone in the business application space to do all they can to make their Web products more mobile.

In fact, I would go so far as to say its more noteworthy these days if you have a Web-based business application or service and you do Not have a mobile offering. I've said it before and it bears repeating, if you are in this space and you do not have a mobile strategy then what exactly Is your strategy? ERP may take some time, as will tax and some accounting but it's getting there and anything else you can think of for back office is going mobile because, well, so are the people who are using them, simple as. Sure, the devices you are accessing the data or applications from may change but I'd be surprised to see too much more investment made in improving desktop-based products. That's my take.

1 Comment

Hi Seth, and thanks for covering Sage! I think I can help set the announced sale of ACT!, SalesLogix and NonProfit in perspective to the noncore businesses at Sage.
First, Sage is not looking to sell the Construction and Real Estate business. Since the day I arrived here from Microsoft two and a half years ago, I have gotten a call almost weekly asking if we want to sell. If we were I'd be at the head of the line. This is a great business that is growing nicely!
CRE is different from the others and here's why. Nonprofit Solutions, while a great product, was not a market share leader as is CRE, and the investment required to make NonProfit a leader would be better spent on other activities that align to the strategy, such as investing in Sage Construction Anywhere. ACT! and SalesLogix are great products, but we have three CRM products. Choosing one and integrating with all our products is a more focused approach, thus the sale of those two products.
CRE is relevant to Sage in terms of growth and revenue representing an even bigger percentage of North American revenue with these divestures. Sage has several cross-sell initiatives within North America, such as payments, in which CRE is significantly participating. Additionally, the construction and real estate sector is a huge sector in North America, and we share a significant amount of customers in this sector across other products like Sage 50.
There were a few other subtle signs that were not present with the other products. Collectively there were seven products that were sold off, all but one were NOT rebranded, subtle but a telling sign. Additionally all those products were placed under Marc Lupe the CFO, again subtle but they were not connected to either the small business or mid market growth engines. Those products Sage decided to keep got placed into either mid market with Joe Langner (this is where CRE lives) or in small business with Connie Certusi. My point is that the writing was on the wall and pretty obvious since the mid year reorganization in 2012 if you could see the whole picture.
While technically CRE is classified as a non-core business, we are very integrated into Sage as a key component of the portfolio and growth strategy. Sage continues to make investments in the construction and real estate space. Pascal said it best, "noncore does not mean non invest." CRE spearheaded the development of our Microsoft Azure platform offering Sage Construction Anywhere. Even setting aside the fact we add a customer a day with both Sage 300 CRE or Sage 100 Contractor, we have 40,000 construction customers to sell Sage Construction Anywhere to. That is the power of being the market leader and one obvious reason we're not selling this business. Seth, it's hard to figure out what's going on in Sage from the outside. One can speculate on what's happening, but I'd be happy to talk with you anytime you'd care to learn what we're doing.
Thanks again for giving some "airtime" to CRE